Workday aims at enterprises with cloud ERP as IPO approaches

Workday unveiled upcoming versions of its cloud-based ERP (enterprise-resource-planning) software on Tuesday during an event in Las Vegas, and in the process fired a warning shot across the bow of the likes of Oracle and SAP.

Version 16 of Workday's suite, due for release in coming months, will feature upgrades to its financials module that will enable the vendor to "run the workloads of the largest companies in the world," co-CEO and founder Aneel Bhusri said during a keynote address, which was webcast. "There might be gaps in functionality, but they're closing quickly. We're looking for those lighthouse customers."

For one, the system will be able to run payrolls of up to 100,000 workers. "Not many companies have more than 100,000 people in one geography, so we are really starting to take on the largest companies in the world," he said.

Bhusri started and runs Workday along with co-CEO Dave Duffield, who founded PeopleSoft, a company famously acquired by Oracle through a hostile takeover. Bhusri is a PeopleSoft veteran as well, having served as the vice chairman of its board for several years, among other roles.

At PeopleSoft, Duffield was known for his folksy leadership style, which has carried through to Workday. On Tuesday, he characterized Workday as one happy family.

"We're all on the same version of the system and consequently speak the same language," he told the Las Vegas crowd. "At an Oracle or SAP or Lawson user conference, you couldn't say that."

Also, he and Bhusri have been friends and co-workers for 18 years, Duffield added. "Marriages don't last that long."

A recent customer survey returned 96 percent positive marks for Workday, Duffield said at another point. Only eight customers had something negative to say, and in a few cases the dissatisfaction stemmed from a bad experience with a Workday business partner, he claimed.

Workday 15 will be released in early December and features 174 new features on top of hundreds of others issued in three versions over the past year, according to Bhusri. The company's modern design approach has given it the ability to roll out updates so frequently, he contended.

"It's not as if the other guys are not trying, they're just saddled with legacy architectures," he said.

Workday originally was built around a platform called Object Management Server. "Think of it as an application server and some database functions and it all runs in memory," he said. But as Workday's customer base and target customer size have grown, the system has "changed into a distributed grid of services" to handle the scale, Bhusri added.

Earlier this year, Workday also rolled out a cloud-based integration framework for tying its systems to other applications.

Workday now has 238 customers and handles some 2 million employee records, Duffield said. "These are serious customers, by the way," he said. "These aren't the 10-person grocery stores in Topeka." Its higher-profile users include Sony Pictures, Flextronics and Cornell University.

Workday is at an interesting place in terms of its growth rate, Duffield said. "We're large enough to be relevant in the world, yet small enough that Aneel and I and the other Workday folks can still touch each customer."

The company could grow even larger if and when it files for an IPO, a move Duffield said is "on track" for some time next year. IPOs are considered "a rite of passage for any good company," and a successful one could convince more C-level executives that Workday is a viable option, he said.

In the meantime, Workday is looking to build out its partner ecosystem. Workday currently has 25 partners covering areas such as system integration, recruiting, talent management and subscription billing, but hopes to increase that number to 60 by the end of 2012, according to Bhusri.

One of Workday's highest-profile partnerships is with fellow cloud vendor Salesforce.com.

On Tuesday, Bhusri described how Workday 15 integrates the system with Salesforce.com's Chatter enterprise social-networking service. The combination will result in secure, "socially enabled business processes," he said. For example, if a number of executives want to use the system to discuss a possible company reorganization, measures will be in place to ensure only authorized people can chime in, he said.

Other new features include an integration with Microsoft Outlook; a series of talent-management enhancements including a Career Interests module that allows employees to "express their career goals and aspirations [and] explore jobs within their company"; a connector to third-party payroll systems; and improved financial analytics.

Overall, Workday's strategy is clicking and larger rivals may have reason to be worried, according to one expert.

"They are in a really good position," said analyst Ray Wang, CEO of Constellation Research. "They're taking market share away from SAP and Oracle. Customers of Dave and Aneel in the past are ready to move to the next product, and that's what they're doing."

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